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> I've commented elsewhere that I'd be pissed at the moral hazard of unsecured depositors getting a federal bailout This is a very strange take that I disagree
by pgwhalen 4y ago
> I've commented elsewhere that I'd be pissed at the moral hazard of unsecured depositors getting a federal bailout
This is a very strange take that I disagree strongly with. There is no such moral hazard, and I would not call depositors being made whole any sort of bailout.
I would argue that one of the most important functions of the government, right alongside national security, is maintaining the illusion that bank deposits == money, and that they are callable on demand at par value for any individual or firm in the country.
- hn_throwaway_99 4y agoIf that's the case, then the FDIC should get rid of the depository limit then, and price their insurance accordingly. The point is, right now, and in previous failures, uninsured depositors were not made whole. And, if the feds weren't worried about contagion, then they absolutely would not bail out depositors. So the moral hazard is "if you're going to blow up, make sure you blow up big, and get enough powerful people to contact your congressmen, otherwise, you're screwed".
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